Enforcement
A former director of London Capital & Finance plc (LCF) has been fined £31,800 ($40,000) and banned from working in financial services after recklessly signing off hundreds of financial promotions. Floris Jakobus Huisamen was responsible for compliance at the firm but his actions resulted in thousands of investors being mislead.
LCF marketed minibonds to retails investors, and Huisamen’s sign-off made the bonds seem more attractive investments than they actually were. Investors were not given the full picture about the risks of the product, including the presence of hidden charges and the unsustainable nature of the lending being carried out by LCF.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, said: “Mr Huisamen should have ensured LCF’s financial promotions were ‘fair, clear, and not misleading’. However, under him, the approval process became an ineffective tick-box exercise – as a result, thousands of investors were persuaded to invest on the basis of highly misleading statements.”
“His failings contributed to thousands of retail investors losing significant amounts of money. It is right that he can no longer work in financial services.”
By agreeing to settle the case, Huisamen obtained a 30% discount on his fine.
S56, S66 Financial Services and Markets Act 2000
Action by the FCA resulted in over 10,000 financial advertisements and other promotions being withdrawn or changed in 2023. That figure is up 17% year-on-year. The regulator also published 2,285 alerts to prevent consumers from losing their money to scams, up from 1,800 in 2022.
And 450 consumer alerts were issued between 8 October 2023 and 31 December 2023 as a result of the new focus on illegal cryptoasset promotions to UK consumers.
Lucy Castledine, Director of Consumer Investments at the FCA, said: “People need clear, fair and accurate information to base their financial decisions on. We will continue to intervene and take action when we identify firms not meeting our minimum standards.”
Work with the National Crime Agency (NCA) resulted in the arrest of three individuals in London on suspicion of insider dealing, conspiracy to insider deal and money laundering linked to organised crime. A fourth individual was interviewed under caution and remains under investigation.
Steve Smart, joint executive director with responsibility for delivering enforcement and market oversight for the FCA, said: “Insider dealing poses a significant threat to the integrity of financial markets both in the UK and overseas. The FCA is committed to combatting organised criminal networks involved in this threat.
“We work tirelessly, using our own sophisticated monitoring systems and specialist teams, to identify and disrupt people involved at each stage of these trading events from the insider leaking information, people who sell inside information to traders and brokers who facilitate access to the trading market.”
Arrest warrants for Konstantinos Papadimitrakopoulos and Dimitris Gryparis, respectively the former chief executive and chief financial officer of Globo plc, have been withdrawn. The FCA has decided it is no longer in the public interest for the prosecution to continue.
The regulator had sought extradition of the pair in 2019 to face criminal charges of fraud and making misleading statements about the value of Globo’s shares prior to its collapse in November 2015. That request was refused by the Hellenic Court of Appeal, but Greek authorities then pressed charges substantially similar to those the FCA was seeking to bring.
The pair were subsequently acquitted in May and November 2021. The FCA says it has “only recently been able to confirm details of their acquittals” and, after reviewing those details, decided to withdraw the warrants.
Dharam Prakash Gopee (70), has been sentenced to almost eight years in prison for failing to pay a confiscation order. He had been prosecuted by the FCA and convicted of illegally lending to vulnerable people at high rates.
A confiscation order to recover over £5m of criminal proceeds was made against Gopee in December 2019. But he unsuccessfully challenged this and associated orders on over 30 occasions. The Court of Appeal found him to be a vexatious litigant, and made an order preventing him from making any further civil claims without permission.
The City of London Magistrates’ Court has now decided that Gopee was wilfully refusing to cooperate with the confiscation order and that imprisonment was the only appropriate option.
Bankruptcy of the directors of Avacade has been secured by the FCA. Avacade, Alexandra Associates and their directors had been instructed to pay £10,715,000 ($13,459,968) restitution to consumers after providing illegal pensions introduction.
Mohammed Zina, a former analyst at Goldman Sachs International, has been found guilty of six offences of insider dealing and three offences of fraud following a 12-week trial. He has been sentenced to 22 months in prison.
Zina worked as an analyst at the firm between 2014 and December 2017. During that period he came into possession of inside information relating to potential mergers and acquisitions that his employer was advising on.
Between 15 July 2016 and 4 December 2017, he dealt in six shareholdings using this inside information:
- Arm Holdings plc;
- Alternative Networks plc;
- Punch Taverns plc;
- Shawbrook plc;
- HSN Inc;
- Snyder’s Lance Inc.
The trading was partly funded by three loans, fraudulently obtained from Tesco Bank, totalling £95,000 ($119,337). And the trades made Zina a profit of approximately £140,486 ($176,475).
Rules and consultations
Around 20 of the largest financial adviser firms have been written to for information on delivery of their ongoing advice services in response to the introduction of the Consumer Duty. The regulator wants to know if they have assessed ongoing services after the introduction of the new requirements. The focus seems to be on finding out about charges that continue after advice is given.
Speeches and media
Bryan Zhang has been appointed to the FCA Board. Zhang is a co-founder and the Executive Director of the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge Judge Business School.
FCA Chair Ashley Alder said: “Bryan brings with him a wealth of experience working at the forefront of innovation. I know he will be an important asset to the board and his expertise will help the FCA keep pace with an ever-evolving landscape.”
Market Watch 77 was released, with an emphasis on trading carried out by organised crime groups. We carried some analysis of the guidance.
